Augie's preschool teachers take the children outdoors every day. A sign at the classroom door says "Inside Start" or "Outside Start," a signal to us (grand)parents to help the child dress accordingly. I had taught him to look for "I" or "O" on the sign, but one day he decided to sound out the whole word.
He was quiet for a minute and then he asked, "Grandma, is the 'O' silent?"
His teacher gave me a "He knows about silent letters?" look. He does, and he had realized that the word "outside" doesn't start with the traditional "O" sound. The next day I explained that there are pairs of letters that work together to make new sounds. The word "outside" is not pronounced "oat-side" or "oh-oot-side," because the two letters make a new sound. We found lots more "ou" words in stories we were reading, and I pointed out some other letter pairs. With his parents, he's been talking about "th," which also comes up a lot when you're sounding out words.
Some days he loves the sounding-out process. Other times he just wants to listen, to hear the story and let his imagination run and maybe snuggle close and hold somebody's hand while they read. It's all good.